Sponsors (13)
The bill boosts broadband deployment funding by excluding BEAD/IIJA grants from federal income tax—helping speed buildout in underserved areas—but it limits other tax benefits (deductions/credits and basis recovery) and creates compliance costs that can offset some advantages for recipients.
Recipients of eligible BEAD and other IIJA broadband grants (internet service providers, tribal entities, state and local grantees, and contractors) will not owe federal income tax on those grant amounts, leaving more money available to fund broadband projects.
Underserved areas (including rural and Tribal communities) are likely to see lower effective project costs and faster broadband buildout because excluded grant funds can be applied directly to deployment rather than reduced by federal tax liabilities.
Grant recipients, investors, and public planners will have clearer tax treatment for BEAD/IIJA grants, reducing uncertainty and improving planning, financing, and investor confidence for broadband projects.
Recipients (taxpayers and small broadband businesses) who exclude grant amounts from taxable income cannot claim tax deductions or credits for expenses paid with those excluded funds and must reduce the adjusted basis of property by the excluded amounts, which can raise taxable gains on later sales or reduce depreciation benefits.
State and local governments, mixed-funded projects, and other grantees may face additional administrative burden and compliance costs to apply the new exclusion rules and to follow forthcoming Treasury regulations.
Based on analysis of 2 sections of legislative text.
Excludes specified federal and pass-through broadband grants from taxable income while disallowing deductions/credits for excluded amounts and reducing property basis.
Introduced March 5, 2025 by Mike Kelly · Last progress March 5, 2025
Excludes certain federal, state, Tribal, territorial, and local broadband grants and subgrants from recipients' federal gross income for income tax purposes, while preventing double tax benefits by disallowing deductions or credits and reducing the tax basis by the excluded amount. The change applies to grants tied to specified broadband programs in recent infrastructure and appropriations laws, requires Treasury to issue regulations, and is effective for taxable years ending after March 11, 2023.